Monday, October 31, 2011

Contract Law in America: The Anniversary Edition

Last week’s mail brought a copy of a new edition of a legal classic, Lawrence M. Friedman’s Contract Law in America: A Social and Economic Case Study (2011). My copy from Quid Pro Books is a very serviceable paperback, with embedded references to the pagination in the University of Wisconsin Press’s original edition. The book will also soon be available as a download for your Kindle, Nook, iPad or other digital device from Amazon, Barnes & Nobles, and other vendors.

Stewart Macaulay summarizes the book in his foreword, which expands upon his contribution to a recent festschrift for his former colleague at Wisconsin. Friedman, Macaulay writes, “looked at the contracts cases coming before the Supreme Court of Washington at three periods: (1) the organization of the Wisconsin Territory to the Civil War (1836-1861); the Progressive era in the first two decades of the twentieth century (1905-1915); and (3) a time ten years after World War II (1955-1958).” He found that Wisconsinites did not use contract disputes to bring major economic issues to the state supreme court. Instead, they preferred to settle their disputes or to resolve them in other, nonjudicial ways. Legislation took many other classes of disputes (such as employment and trade regulation) out of “the domain of pure common law contract.” The Wisconsin Supreme Court resolved the remainder not by applying “hard, abstract and formal contract law” but by employing “malleable concepts such as waiver and estoppel, and substantial performance.” Ultimately, the court “sought what it saw as just results on the facts of the particular case before it.”

The blurbs make the case for the new edition:

“Contract Law in America is one of the most important works in the entire scholarly literature on American legal history. Friedman took a subject that had been treated by researchers in exclusively doctrinal terms, bringing an entirely new perspective that revealed how contract law has been at the very center of how we need to understand ‘law in action’ in key periods of American development. In the methodology that Friedman applied, in the brilliance of the analysis, and in the new light his book cast on the full dimensions of governance and law in the United States, this book broke new ground. It remains today, still, required reading for any student of legal history.”
— Harry N. Scheiber
Stefan A. Riesenfeld Professor of Law and History, University of California at Berkeley

“The republishing of Contract Law in America is a very welcome event. For years this has been one of the neglected classics of legal literature. Friedman did what the Legal Realists only dreamed of doing—he studied in-depth what kinds of contracts cases state courts had decided over time, and found grand patterns in the decisions. As real-world contracts dropped out of common law litigation and into private ordering and specialized regulation, courts abandoned abstract formal rule-making for particularized equitable resolutions. In the present moment, more receptive to social and empirical studies of law than was 1965, Friedman’s book should finally find the audience it deserves.”
— Robert W. Gordon
Professor of Law, Stanford University

“Contract Law in America remains a classic examination of the relationships among legal doctrine, legal culture, and the shifting frameworks of American business enterprise. Amid the current academic re-engagement with questions of political economy, we can only hope that more historians, social scientists, and legal scholars acquaint themselves with Friedman’s probing analysis of how law did, and did not, influence American commerce, and how commerce did, and did not, influence American law.”
— Edward J. Balleisen
Associate Professor of History, Duke University

After encomia like those, a further endorsement is unnecessary, but I’ll add mine anyway. Chapter 4, “Contract Law and the Legislature,” is essential reading for any legal historian of the administrative state. Readers who considered only the book’s title might not expect to find a remarkably comprehensive, concise, and lively summary of the rise of the regulatory state in Contract Law in America. But this was a book conceived at the University of Wisconsin Law School when Willard Hurst was its intellectual leader, and Friedman understood that “the structural framework within which contractual behavior took place was created by legislation and legislatively created agencies.” In Chapter 4 he wastes little time on statutes that were “the stock-in-trade of every common law jurisdiction,” such as the Statute of Frauds, usury laws, and the Uniform Sales Act, but lingers over those that illustrate the stages of Wisconsin’s historical development. Thus he recounts the luxuriant growth of the homestead exemption in the nineteenth century–including a statute, surely adopted at the urging of the bar, exempting two hundred dollars' worth of the “library and implements of any professional man”– and attributes it to Wisconsin’s desire to promote economic growth. “The legal enforceability of market transactions in Wisconsin existed, or was allowed to exist,” Friedman wrote, “only with respect to surplus capital–which was scarce.” As a result, potential settlers knew that an economic catastrophe would not leave them without the means to recover.

More generally, Friedman finds that in their frontier days Wisconsites preferred a self-enforcing style of regulation, such as a 10-percent bounty for fishing wayward logs out of the state’s rivers. This he attributes to a brute socioeconomic fact:

Twentieth-century government depends on heavy taxes and a large, trained corps of government professionals. Frontier Wisconsin had neither. Its citizens were too poor to be taxed heavily, and without substantial taxes, the state could not maintain a large staff of employees. These facts were more important, perhaps, in explaining why government did not do as much as it might, than any theories about government’s proper role in the economy.

As you might expect from the forgoing, things get even more interesting once Wisconsinites become sufficiently wealthy to tax themselves and sufficiently appreciative of their social interdependence to want to do so. For a Hurstian like Friedman, the resulting legislation was contract law. Thus, the Standard Fire Insurance Policy of 1895 was “the high-water mark of forced conformity of contract," and food, health, and labor laws mandated terms in other contracts.

Even more unexpected is the space Friedman gave to occupational licensing, which legal scholars had more or less ignored since Ernst Freund’s Administrative Powers over Persons and Property (1928). Not only did licensing laws construct the markets in which contracting took place; by Friedman’s third period, they backstopped the interests of consumers. After noting that “an auto dealer’s license might be revoked for willful ‘failure to perform any written agreement with any retail buyer,’” he brought his point home with a dagger thrust to one of a doctrinally oriented Contracts scholar’s more sacred cows. “Holmes said, in 1897, that ‘The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it–and nothing else,’” Friedman wrote. “But the legislature did not read Holmes.”

Macaulay concludes his foreword with a tip for reading his friend and colleague: “If you keep in mind Friedman’s sense of humor well mixed with anger at stupidity that hurts people, you can understand him better.” Of the many reasons to discover or rediscover Contract Law in America, the chance to observe that sensibility at work is among the best.